This Investment Research Paper addresses the issue of renewable power generation in the UK and in mainland Europe, which – after the deep-seated financial crisis of 2008/09 and the ensuing recession – now has better prospects of achieving critical mass. It also considers investment perspectives.
In recent years, there has been a major shift in favour of renewable generation. It has been led by wind generation, mainly on-shore but also increasingly offshore. In the UK’s case, there has been a sea-change in operating costs, illustrated by the successful bids by two leading energy companies – EdP Orsted and Engie – to build and operate North Sea wind farms.
Share prices of virtually all leading energy companies have slumped over the past decade, with EdF and the two German companies, E.On and RWE, being dire performers. The latter two companies have undertaken major restructuring in the light of the highly contentious decision by the German Government in 2011 to end nuclear power generation by 2022.
Nevertheless, some energy companies have prospered of late. Denmark’s longestablished turbine manufacturer, Vestas, has seen a 20x rise in its share price since its nadir in November 2012. Also, in Denmark, the re-named Orsted, which focuses on renewable generation, has seen its shares rise by ca.25% since its IPO in late 2017.
In the UK, smaller renewable power investment funds, such as Greencoat UK, TRIG and Next Energy Solar, have met investor expectations and have delivered a steadily rising dividend stream.
It is self-evident that wind-power generation is the key renewable source. Recent figures show EU wind capacity of 169 GW, a small percentage of which are offshore wind plants.